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Govt forces INBS-EBS merger - 23-Nov-2009

Government forces INBS-EBS home loan merger

The Government has told EBS and Irish Nationwide Building Society to combine their home loan books in to a single entity within EBS, according to weekend reports. According to a report in the Sunday Business Post, the Department of Finance instigated talks in recent days with directors of Irish Nationwide in a move that will mark the end of the society's status as a standalone entity.
The deal will pave the way for an orderly wind-down of the institution, in conjunction with the transfer of its E8 billion commercial property loan portfolio to the National Asset Management Agency (Nama).
The society has engaged Goldman Sachs and McCann FitzGerald to advise it on the financial and legal aspects of the transfer. The plan will effectively amalgamate both societies' existing businesses within EBS, the stronger of the country's two remaining mutuals, the newspaper said.
The transfer of Irish Nationwide's property development loans to Nama is expected to trigger multi-billion euro losses that will wipe out the society's capital base and render it insolvent. It would be unable to continue trading without a major capital injection.
Irish Nationwide is believed to have been examining a number of options for its future, but its board was told unequivocally last week that Minister for Finance Brian Lenihan believes it should talk to EBS about a merger.
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